Friday, April 27, 2012

Morning Market Analysis

The SPYs spent 12 days consolidating between the 136-139 level. However, yesterday, prices popped higher, breaking out of the range.

The daily chart shows prices moving beyond the trading range along with a buy signal about to emerge from the MACD. However, given the fundamental backdrop, I'm not thrilled by this rally and need to see a lot more evidence to even think about getting excited.

The above chart of the IEFs is a big reason to not get excited about the move. Treasury prices are at high levels in reaction to the underlying economic situation. This is going to take money out of equities.

In addition, consider the EDE charts above. Only the Chinese market (second from top) is showing any propensity to rally; all the other markets are at best treading water.